Euro bid to end hostile takeovers

The European Parliament is debating legislation on company takeovers which many people in the City of London fear could spell the end of British-style hostile bids.

Amendments to the legislation, introduced at a late stage in a 10-year consultation process, would transfer power over whether to accept hostile bids from the target company's shareholders to its board. And the legislation would introduce a requirement to consider the impact on jobs of any takeover.

The Lord Mayor of London David Howard said that the proposed European legislation would be binding on the City and would force it to operate in a style more like that of Germany - where takeovers happen largely by agreement.

British companies mount the majority of the hostile takeover bids in Europe, and it is feared that the changes would hamper the City's entrepreneurial activities as takeovers would become long drawn out processes of negotiation.

Mr Howard told BBC Radio 4's Today programme that the legislation, as amended, would make hostile takeover bids 'almost impossible'. He said: 'We are very unhappy indeed and are hoping the European Parliament rejects (the amendments) when it debates them. We are all very surprised that they should have come up at such a late stage in the consultation process.

'It is undemocratic, shifting control away from the owners of the business to boards, who are able to mount all sorts of defences during the course of a bid and actually frustrate the shareholders from exercising their own votes.'